In the lead-up to the G-20 conference in April, several world leaders railed against the alleged impropriety of offshore tax havens. The list of locations was broad and included financial centres such as Barbados, which has typically been viewed as a responsible offshore financial centre, leading many commentators to conclude that G-20 leaders were unfairly trying to detract blame from their own poor standards of regulation and governance, which contributed to the financial crisis.

Barbados’ prime minster, David Thompson, met with several key G-20 advisors in London to persuade the Organisation for Economic Co-operation and Development (OECD) membership to reconsider the effect that their stated positions against international financial centres would have on the economies of small Caribbean states.

The island has since been named as one of the countries acknowledged by the OECD global forum as having implemented internationally agreed tax standards. It is also the only independent Caribbean nation to have made the list of substantially compliant countries. This reflects many years of building a transparent, well-regulated jurisdiction, with treaties crafted on the OECD model, says Mr Thompson. “There is still work to be done on improving financial regulation and the establishment of a financial services commission is a great boon for our reputation,” he says.

Spearheading issues

The Caribbean community of member states organisation, Caricom, held a meeting in March at which Mr Thompson led discussions with European OECD member countries to bring Caricom member country concerns to the attention of the US leadership. “We obviously have some concerns about broad-brush designation of tax havens or any push towards protectionism,” he says.

President Barack Obama’s election platform had many Barbadians hopeful that the new US president would have a deeper and more meaningful understanding of the unique position that those in the Caribbean find themselves in due to their close proximity to the US.

It is this strategic location that makes Barbados a natural choice for international firms seeking to enter Latin and North America, says Mr Thompson. Barbados has a very attractive double taxation agreement with China, for instance. “Chinese and other international investors need a country in the Caribbean as a route into Latin America by providing financial services, almost like a trade facilitator or trade centre,” he says.

Also on the agenda will be the revision of existing trade agreements with the US – which were extended two years ago. “An indefinite extension to the original agreement is not in our interests and there will be pressure in congress because we obviously need a successive agreement,” he says.

Shift in specialism

Barbados was historically reliant on the sugarcane trade but in recent years the island’s reputation for manufacturing and tourism has grown alongside its reputation as an offshore finance domicile. Mr Thompson’s government is widely regarded as business-friendly and economically sound, which has helped to attract increasing levels of FDI and, in turn, has significantly reduced unemployment.

But maintaining jobs and growth in an economic downturn is a challenge. “Obviously because of what is happening, particularly in the area of financing of major developments, there has been a slowdown,” says Mr Thompson, adding that the government is trying to give as much encouragement as it can to foreign businesses, subject to resources.

Developers of the Four Seasons Hotel project in Barbados have reportedly run into trouble and halted construction. Mr Thompson says: “We’ve just met with the owners. We’re adopting a much more hands-on or hand-holding approach to ensure that these transactions can continue and that doesn’t just go for UK investments but for all projects.”

CURRICULUM VITAE

DAVID THOMPSON

2008Government of Barbados

Prime minister

2005Government of Barbados

Leader of Democratic

Labour Party

1993Government of Barbados

Minister of finance

1991Government of Barbados

Minister of community development and culture